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Thomas Cook profits fall to £308m after 'difficult year for tourism'

Published 23/11/2016

Thomas Cook's profits fell but the pound's tumble against the euro and moves to shift from Turkey to alternative destinations helped limit the blow
Thomas Cook's profits fell but the pound's tumble against the euro and moves to shift from Turkey to alternative destinations helped limit the blow

Travel giant Thomas Cook laid bare the impact of a "difficult year for tourism" as it posted a fall in profits after being hit by European terror attacks and political instability in Turkey.

The group said underlying profits dropped to £308 million in the year to September 30 from £310 million a year earlier as it was forced to switch from popular sun-seeker destination Turkey, while demand in Belgium was knocked by the Brussels terrorist atrocity .

But the pound's tumble against the euro since the Brexit vote and moves to shift from Turkey to alternative destinations helped limit the blow.

It said underlying profits tumbled 41% on a like-for-like basis and with the currency boost stripped out.

Bottom-line pre-tax profits were 47% lower on a like-for-like basis, at £42 million.

Peter Fankhauser, chief executive of Thomas Cook, said: "In what's been a difficult year for tourism, I'm pleased with the progress that we've made at Thomas Cook.

"The early actions we took to shift our holiday programme into the Western Mediterranean and long-haul, together with the benefits of a stronger euro, helped us to maintain revenue at group level."

He said the group remains cautious over the year ahead.

" We've had an encouraging start to bookings for summer 2017 in our key markets, but it is early days," added Mr Fankhauser.

Thomas Cook said current winter bookings are 2% higher than a year earlier, or 5% ahead with the impact of Turkey stripped out.

In the UK, bookings are also 2% higher or 4% up excluding Turkey, with average selling prices up 1%.

Early-bird demand has already driven bookings higher across the group for next summer, with UK bookings up 2% thanks to strong demand for holidays in Spain, Greece, Bulgaria, Mexico and the Caribbean.

It is also taking steps to turn around trading in its German airline arm Condor, which it hopes will bear fruit in the second half of the current financial year.

Geopolitical turmoil has been an ongoing concern for travel firms like Thomas Cook, which last year suffered from major cancellations in the wake of the deadly terrorist attacks in Tunisia, Egypt and Paris.

Thomas Cook lowered its full-year earnings guidance to around £300 million when it released third-quarter figures back in July, having previously projected profits of between £310 million and £335 million.

The company is now investing in a new raft of own-brand hotels to "attract a new generation who might have thought a package holiday wasn't for them".

It recently announced it will open 14 sites across countries including Croatia, Spain, Italy and Cyprus over the next two years.

Shares in Thomas Cook lifted more than 7% as it cheered investors by resuming its dividend payout after a five-year break, despite falling annual profits.

Mr Fankhauser said aside from the boost from the weaker pound, he had yet to see "any noticeable impact" from the Brexit hit on trading.

He also made a plea ahead of the Autumn Statement for the Government to cut air passenger duty (APD) on flights for UK passengers.

He said: "APD is by far the highest in Europe and among the highest in the world.

"If the Government wants to help families, they should make it cheaper for them to enjoy a hard-earned holiday."

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